Global Future of Retirement Conference

GFOR: Fee transparency could challenge plan sponsors looking for high-return investments

Transparency on fees might prove challenging for plan sponsors, said Stanford University researcher Ashby Monk, a panelist at Pensions & Investments' Global Future of Retirement Conference in New York.

During a panel on global macroeconomic outlook and review at GFOR on Monday, Mr. Monk explained that the industry's focus on fee transparency makes it more difficult for institutional investors to invest in high-return assets, such as hedge funds and private equity. Plus, investors can no longer take risks with such assets to invest their way out of underfunding.

"Big pension funds in the U.S. are designed to be efficient, not innovative," Mr. Monk added.

Mr. Monk explained in an email to P&I on Thursday that although fee transparency makes it more difficult for asset owners to allocate to the extremely high-fee asset managers such as hedge funds and private equity funds, it will force institutional investors to be more innovative in seeking higher returns.

Mr. Monk also told GFOR attendees that he is currently seeing three new innovations being made within the institutional investment industry: technology enablement; collaborative models among asset owners; and creating platforms to seed new managers.

"Where is and what is a true risk-free asset, people are wondering," Mr. Monk said.